Introduced at the 1936 Paris Motor Show, the Friedrich Geiger designed car was a development to the 500K, itself a development of the SSK. Available as a two seater cabriolet, four seater coupé or seven seater limousine with armoured sides and armoured glass, it was one of the largest cars of the time.
The straight-8 cylinder engine of the 500K was increased to 5.401 litres (5,401 cc), which aspirated by twin pressurized updraft carburetors, developed a natural 115 hp (86 kW). However, there was an attached Roots supercharger which could either be engaged manually for short periods, or automatically when the accelerator was pushed fully to the floor. This increased power to 180 hp (130 kW), creating a top speed of 170 kilometres per hour (110 mph).
Power was sent to the rear wheels through a four-speed or optional five speed manual gearbox that featured synchromesh on the top three gears. Vacuum-assisted hydraulic brakes kept the car under the drivers control.
The 540K had the same chassis layout at the 500K, but was significantly lightened by replacing the girder-like frame of the 500K with oval-section tubes - an influence of the Silver Arrows racing campaign.